Week 1 Quiz

Scarcity exists when:

individuals can have more of one good but only at the expense of another.

Although water is very abundant in most places, it is scare because:

there is not enough of it to meet all needs.

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

whatever she would have done with those 48 hours.

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

whatever she would have purchased with $10,000 and whatever she would have earned had she not been in college.

The local Taco Hut charges the same price for everything on its menu: $3 will buy a taco, a burrito, or nachos. You buy the taco and think that if you had not purchased the taco, you would have purchased the burrito. The opportunity cost of the taco is:

your enjoyment of the burrito.

Say Sarah was choosing between three alternatives: working on her job that pays her $20; writing a term paper wheich she values at $10; or going out with a friend, which she values at $30. The opportunity cost of writing the term paper is:

$30.

Say John was choosing between 3 alternatives: going to the beach, which he values at $40; washing his car, which he values at $20; or going out with a friend, which he values at $60. The opportunity costs of going out with a friend is:

$40

Suppose Sarah was considering between buying a burger or a pizza. She would be willing to pay $10 for the pizza, which costs around $5. The opportunity costs of buying a burger would be:

$5

Say Sarah was choosing between three alternatives: working on her job that pays her $20; writing a term paper which she values at $40; or going out with a friend, which she values at $50. The opportunity costs of writing the term paper is:

$50.

A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes 5 hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game?

$55

A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7, she could work at the college library at a wage of $6, or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

$7.

Say John was choosing between three alternatives: going to the beach, which he values at $50; washing his car, which he values at $100; or going out with a friend, which he values at $80. The costs of washing his car is:

$80

Opportunity cost is:

the value of the best alternative forgone in making any choice.

Say John was choosing between 3 alternatives: going to the beach, washing his car, or going out with a friend. The opportunity cost of going out with a friend is:

Going to the beach or washing his car

Say you took an average of 20 minutes to answer and ECON problem, and 40 minutes to answer a MATH problem. If you had a limited time left to study, your best strategy would be to solve:

It depends

Say you took an average of 5 minutes to answer an ECON problem, and 2 minutes to answer a MATH problem. If you had a limited time left to study, your best strategy would be to solve:

It depends

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. How could Molly and Sandy gain from trade?

Molly could trade peppers to Sandy in exchange for tomatoes if Molly was the more efficient grower of peppers.

Which of the following demonstrates how people respond to incentives to make themselves better off?

More students major in economics when they hear that salaries for economists are rising.

A key theme fundamental to all of economics is:

People have unlimited wants facing limited means to satisfy them.

Lena and Jess are roommates. Lena hates to clean the bathroom. Jess will agree to clean the bathroom only if Lena vacuums the living room. This statement best represents this economic concept:

There are gains from trade.

Nate and Dylan are brothers. They have to mow the lawn and clean their rooms before they can go to the high school football game. Nate mows the lawn and Dylan picks up the rooms, and they make it to the football game on time. This statement best represents this economic concept:

There are gains from trade.

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of which principle at work?

There are gains from trade.

Scarcity in economics means:

We do not have sufficient resources to produce all of the goods and services we want.

If resources are scarce if means they:

cannot provide enough goods or services to satisfy all human material wants and needs.

If the state government allocates additional spending on education, the opportunity cost is:

measured in terms of the best alternative uses for that money.

Gains from trade arise because of:

specialization in production.

Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. Your decision on what to study should be based on:

the additional benefits of studying for each class.

The University recently inherited a large mansion from a wealthy alumnus. The University plans to use the mansion to host faculty parties and to house distinguished guests. The opportunity cost of the mansion to the University is:

the amount the university would receive if it sold the mansion.

Specialization and trade usually lead to:

the exchange of goods and services in markets.

The opportunity cost of something is:

the next best alternative given up to acquire it.

The best measure of the opportunity cost of any choice is:

the next best alternative you have given up to make that choice, even if no monetary costs are involved.